Singapore sovereign fund GIC to invest $700 million in Bharti Airtel

A girl checks her mobile phone as she walks past the Bharti Airtel office building in Gurugram, previously known as Gurgaon, on the outskirts of New Delhi, India.Reuters

Bharti Airtel, in its filing before the regulator, said Singapore sovereign wealth fund GIC Pte. Ltd, will be investing Rs.5,000-crore ($700 million) by subscribing to its shares. Apart from GIC, the company's promoters - Bharti Group, Bharti Telecom and Singapore Telecommunications Ltd (Singtel) - will also take part in the rights issue.

Bharti Airtel, India's second largest telecom controlled by Sunil Mittal, said the company has transferred their right of subscribing to the shares in favour of the Singapore government. Currently, Bharti Airtel Ltd. is planning to raise Rs.32,000 crore ($4.5 billion) to pare debt in view of stiff competition posed by Reliance Jio Infocomm Ltd. Bharti Airtel's credit rating was downgraded by Moody's recently by one notch to Ba1 from Baa3.

Bharti Airtel is planning to raise Rs 25,000 crore through a rights issue. While promoters will subscribe to shares worth Rs.11,785 crore, another Rs 7,000 crore will be raised through foreign currency-denominated perpetual bonds. Perpetual bonds allow payment of a fixed income security with no maturity date.

However, the amount being raised from GIC will not be part of the debt. The new round of funding will allow Bharti Airtel to reduce its debt by 30.5 percent, according to some estimates.

Established in 1981 to manage Singapore's foreign reserves, Singapore's sovereign fund GIC is a global long-term investor with more than US$100 billion invested in assets in over 40 countries worldwide.

The logo for Singapore sovereign wealth fund GIC Pte Ltd, is seen on a building in SingaporeReuters